Regency Mines shifts funding terms as it looks to maximise 2019 profitability (RGM)

Regency Mines (LSE:RGM) dipped 5pc to 0.28p on Monday morning after making several alterations to its funding arrangements, as a way of strengthening its operational focus this year. The company has partially repaid and restructured last year’s $1.6m convertible loan and has also taken on a new £676,000 loan with warrants.  

The new £676,000 convertible loan notes and accompanying warrants have been issued to institutional and high net worth investors. The notes can be converted into Regency shares at 0.42p each at any time until 30 May 2020. Each note has a denomination of £1,000, meaning they convert into 238,095 new Regency shares.

Each note holder also receives 119,046 warrants for each note subscribed. These entitle the holder to subscribe for one Regency share at a price of 0.6p at any time until 31 May 2021. All-in-all, up to £1.1m of notes may be issued in one or more tranches.

Elsewhere, Regency announced the partial repayment and restructuring of the $1.6m loan taken out from institutional investors in June last year. The business was lent the funds by Riverfort Global Opportunities and YA II PN for an initial term of six months. Regency could extend this loan for six further months in exchange for an additional $80,000 payment.

In today’s update, Regency said it executed a deed with the lenders last Friday to supplement and amend the terms of the loan.

Notably, this saw the business make a $580,000 repayment. The two lenders will now use $500,000 (£395,000) of this payment to subscribe for 395 of today’s newly issued convertible notes. Regency said it could make an additional $160,000 repayment from the proceeds of any third-party financing. This could include the issue of any further tranche of convertible notes.

Under the terms of the new deed, Regency will now make monthly $50,000 payments of principal and interest between May 2019 and February 2020. As a result of this extension, it must now pay the $80,000 extension fee and $20,000 of a $156,000 restructuring fee. In respect of this, its lenders have subscribed for c.22.5m new Regency shares at 0.35p each. Meanwhile, the balance of the restructuring fee becomes payable when the loan matures in February 2020. It will have an interest rate of 12pc per annum.

Regency’s chairman Andrew Bell said the May 2020 notes and changes to the $1.6m loan note have ‘shifted the main burden of any repayments into 2020’. He added that this was a ‘prerequisite’ for making the most of the numerous opportunities it has identified to boost cash flows and profitability.

The business manages a portfolio of mineral, oil and gas and energy storage projects. These includes a 50pc stake in the Mambare nickel-cobalt laterite deposit in Papua New Guinea and a 47pc position in Mining Equity Trust, which acquires and operates producing metallurgical coal assets in the US. It also owns an 8.9pc stake in Curzon Energy (LSE:CZN) as well as holdings in Whitecar, Allied Energy Services and Red Rock Resources (LSE:RRR), which is also chaired by Bell.

‘This clearer runway through 2019 and into next year gives us more time to unlock and build value, and reduces short-term uncertainty,’ said Bell. ‘Our primary focus is on growing cash flows from our coal operations through 2019 and generating cash remittances back into the parent company.  In other parts of our business, we see opportunities for profit also demanding our attention.’

Author: Daniel Flynn

Disclosure: The author does not own shares in the company mentioned above

Regency Mines gives operational update on its energy storage focussed subsidiary EsTeq (RGM)

On Friday, Regency Mines (LSE:RGM) released an update on its 100% owned subsidiary, EsTeq Limited. The company was formed in 2017 to consolidate some of Regency's interests in the battery storage, battery metals, and energy storage technology space.

EsTeq holds a 5.584% interest in Whitecar Limited, a company renting white Tesla vehicles at six locations across the UK and Norway. The holding is currently worth £462k - up from the original £400k investment - and Regency reports that Whitecar is in discussions with a significant number of strategic and industry partners. Whitecar is a pioneer in the field of Electric Vehicle (EV) rentals and is preparing to expand into Germany in 2019.

EsTeq has also committed £50k to the development of a new project in energy storage and trading, and grid backup, under the name Allied Energy Services Ltd. The company owns 80% of Allied Energy which has secured land lease options over a 0.94 acre site in Knowsley capable of hosting a 20MW facility. Allied Energy has also secured options over three farmland sites in the Liverpool area, each capable of hosting a 25MW energy generating and storage facility.

In addition, Allied Energy has agreed Heads of Terms with a leading property, transport and logistics company for an industrial site in Scotland. The two hectare site is capable of hosting an initial 50MW energy generating and storage facility. 

The pre-planning process is underway for all the aforementioned sites with a view to commencing construction of the first facility during Q1 2019. The company is working with battery storage technology and combined heat and power manufacturing companies to devise optimal layouts for each facility.

Early discussions are in progress with potential project finance partners and potential blue-chip clients on the potential of supplying their long-term energy needs. Allied Energy is also in preliminary discussions with a potential JV partner affiliated with Oxford University for the co-location of a Research and Development facility with potential financial support from Scottish Enterprise. 

Joseph Jayaraj, EsTeq Executive Director, comments: "Whitecar continues to make progress. At Allied Energy, operations have progressed well during 2018, culminating in the first 20MW project site in Liverpool secured with a long-term lease and planning consent.  Grid connection and project finance are expected to follow during Q1 2019.

We are excited by the potential of Esteq's maiden project site, which, together with a number of pipeline projects on the horizon, will assist in better managing the increased demands on UK energy infrastructure".

 Author: Stuart Langelaan

Disclosure: The author does not own shares in the company mentioned above

Regency Mines announces entry into vanadium sector as demand growth continues (RGM)

Regency Mines (LSE:RGM) sat at 0.33p this morning after announcing its decision to enter the vanadium sector yesterday afternoon.

In an update that helped shares to jump 14.3pc on Thursday, the company said it has secured a 45-day option to buy a 50pc stake in a North American vanadium exploration project. It has paid for the option through the issue of 5m Regency shares at a price of 0.5p each, which comes to a total of £25,000. This price represents a 42.9pc premium to the mid-market share price when the deal was agreed.

Vanadium is a vital additive in the steel alloy and chemical industries and is enjoying a growing demand thanks to rapid infrastructure development in emerging economies and new technologies using so-called ‘super alloys’. Indeed, according to Regency, prices of vanadium pentoxide, one of the most important compound of vanadium from an industrial perspective, have risen by around 700pc over the last three years.

As it stands, around 70pc of primary vanadium supply is a secondary product derived from reprocessing slag generated in steel mills. The remaining 30pc is extracted from several different types of mineral deposits and is primarily produced as a co-product or by-product of other commodities.

Alongside its vanadium option, Regency- which was trading down 18.8pc as at the time of writing – said it has decided to exit its niobium-tantalum project in Greenland. It advised the country’s authorities of its decision to surrender licence 2014/01 at the end of 2018 after concluding that its Motzfeldt project there was non-core. The firm put the shift in its approach to the project – which it acquired in 2014 – down to changing market conditions and company priorities.

Andrew Bell, chairman of Regency Mines, said: ‘As we exit Greenland having concluded that the niobium-tantalum project there was non-core, we are pleased to have secured this option for Regency Mines, which, if exercised, gives the company exposure to a vanadium exploration opportunity in North America that lies squarely within our battery metals focus and complements our nickel-cobalt asset at Mambare.

A successful project in vanadium could provide Regency with three main pillars of value within the Company.  The vanadium project would provide a high potential impact exploration opportunity.  At our 50% owned Mambare project we have a significant JORC compliant nickel/cobalt deposit. And we have a revenue-generating coal production asset through our 47% interest in Mining Equity Trust LLC. Regency Mines is entering into an exciting phase. We look forward to providing further updates in respect of the vanadium project and across all our business operations.

Author: Daniel Flynn
Disclosure: The author does not own shares in the companies mentioned above